Leeds Building Society has lowered the minimum household income needed to borrow more than 4.5 times annual income, making it easier for people on lower wages to get on the property ladder.
Single or joint applicants earning £30,000 a year can now apply for a mortgage at that level, down from the previous £40,000 minimum.
This change came after the Bank of England allowed Leeds Building Society to go over the 15% limit for lending at or equal to 4.5 times borrowers’ incomes.
The new rules apply to all lending, including 5% deposit mortgages and the Income Plus range, which is aimed at first-time buyers.
Under these updates, single or dual applicants on £30,000 a year may be able to borrow £165,000 with an Income Plus mortgage, compared to £134,700 before, subject to standard affordability checks.
With a 95% loan-to-value (LTV) mortgage, a borrower on £30,000 income could buy a property worth up to £173,000, compared to £141,000 previously.
Leeds Building Society has also reduced its stress rate level to boost lending, alongside other measures like Reach Mortgages for those with lower credit scores, its partnership with Experian Boost, and its Home Deposit Saver account.
Matt Bartle, director of mortgages and savings at Leeds Building Society, said: “We welcomed the decision to consider allowing more high loan-to-income on a lender-by-lender basis and are very pleased to have gained the Bank of England’s permission.
“Lowering our minimum income requirements brings the dream of homeownership a step closer for more borrowers, including many earning below national average earnings.
“We understand the importance of being a prudent and responsible lender. We carry out detailed affordability checks to make sure borrowers can realistically afford repayments and not over-extend themselves financially.”
Rachel Springall at Moneyfacts added: “It’s positive to see Leeds Building Society review its lending criteria to support aspiring homeowners.
“The supply of affordable housing versus demand is a key issue, so lenders who are able to reduce minimum household incomes, for those who borrow at the higher end of the loan-to-value spectrum, can make a huge difference.”
